Ethiopia: Telecom Liberalization Enhances Ethiopia's Moves to Digital Economy

ADDIS ABABA - Apart from providing world class telecom services, the involvement of multinational operators to Ethiopia's emerging telecom business would have a paramount importance to enhance the penetration of mobile banking and accelerate the country's journey towards digital economy, a renowned economic expert said.

The economist Eyob Tesfaye (PhD) told The Ethiopian Herald that among other benefits, the coming of multinational operators including the Safaricom-led Consortium is paving the way for access to financial services, as it is widely expected the companies would be engaged in mobile banking.

It is known that Safaricom, the largest mobile network operator in Kenya and Vodafone Group, which is also part of the consortium that won Ethiopia's bid to nationwide telecom service, launched a mobile phone-based money transfer service known as M-Pesa in 2007. The service has been expanded to Tanzania, Mozambique, DRC, Lesotho, Ghana, Egypt, and South Africa.

As to Eyob, the telecom liberalization enhances Ethiopian mobile users to deposit money into an account stored on their cell phones, to send balances to others, including sellers of goods and services, and to redeem deposits for regular money thereby contributing share to modernize the economy.

The expert noted that the coming of new competitors in the telecom industry would also enhance the efficiency of service delivery and customer experience. The telecom liberalization contributes to overall economic growth and opens the door for other global companies to come and do business in Ethiopia.

"Since these companies come up with new technologies, skills and a new way of doing business, their involvement would help the government's tax revenue and the investment would also have a cascading benefit to the larger public." The expansion and development of communication services would increase the efficiency of the economy and employ a significant number of youths, Eyob added.

The expert further highlighted that the government should enhance its engagement to create a conducive policy environment for multinational operators in a bid to capitalize on the enormous financial, technological and knowledge caliber they would bring to Ethiopia.

"The government needs to devise incentives, investment protection or policy amendments to benefit from these companies as efficient telecommunication service is one of the tools to attract more foreign direct investment." Special encouragement and incentives should be given to small or medium money transferring companies after commencing the mobile banking system, he recommended.

More From: Ethiopian Herald

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